Navy Federal Credit Union in Vienna, Va., has agreed to pay $24.5 million to settle claims regarding its overdraft practices.
According to the class action lawsuit, plaintiffs claim that the $97 billion-asset Navy Federal improperly charged overdraft fees on certain charges, called “authorize positive, purportedly settle negative transactions.” That happens when the payment of a subsequent charge causes another debit to make the account overdrawn once it is settled.
The plaintiffs in the case allege that the Consumer Financial Protection Bureau has labeled this practice as deceptive.
A spokesperson for Navy Federal said the credit union does not comment on policy or privacy issues.
The settlement comes on the heels of Navy Federal making history as the first credit union to reach $100 billion in assets. Navy finished 2018 with approximately $97 billion in assets, but strong interest and non-interest income during the first quarter helped it surge to over $103 billion in assets by the end of March 2018.
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In the Navy Federal case, class representatives were Jenna Lloyd and Jamie Plemons, and the case was filed in the U.S. District Court for the Southern District of California.
Class members included those who had a checking account at Navy Federal and incurred overdraft fee charges through the credit union’s optional overdraft protection service on transactions authorized for an account with a positive available balance. The case covers from July 22, 2012, through Nov. 20, 2017. This excludes those who first enrolled in Navy Federal’s overdraft program after Feb. 13, 2017.
The credit union has agreed to pay out up to $500,000 toward settlement administration cost in the lawsuit. Payouts to members of the class action will be determined by the number of overdraft fees they were charged. Payments will be disbursed automatically.
This story was updated at 12:20 P.M. on April 23, 2019.
